STOCKHOLM -- Sweden's government continued its privatization drive Thursday, selling Vasakronan to Swedish property company AP Fastigheter for 41.1 billion Swedish kronor ($6.88 billion).

The sale of the wholly owned property company knocks another company off the government's shortlist of assets it is looking to sell in a 200-billion-kronor privatization drive that started in 2006.

Still to be sold are stakes in telecommunications company TeliaSonera AB, bank Nordea AB and mortgage company SBAB. The government has sold stock-exchange operator OMX AB and spirits company Vin & Sprit AB, the maker of Absolut vodka.

Sweden is selling the stakes in a bid to reduce state ownership in companies, cut debt and lower taxes. As with proceeds from other sales so far, the government said it will use the Vasakronan funds to pay off debt.

Most market-watchers say the sale of Vasakronan, which comes three days after France Télécom SA's takeover approach for TeliaSonera fell through, signals the government remains intent on keeping its privatization pace despite global financial-market turbulence.

"Considering the volatility of the property market and the amount of money the government has invested in this, it probably wanted to go ahead before prices fall further," said Nordea economist Annika Winsth.

Macroanalyst Elisabeth Kopelman at SEB said the sale is "clearly positive for the government" as Financial Markets Minister Mats Odell, who heads the privatization campaign, "is able to check off another company on his privatization list."

Ms. Kopelman said the 24.6-billion-kronor net gain from the deal is about five billion kronor lower than expected, but added it is still reasonable, as higher interest rates are pushing financing costs higher.

The government is TeliaSonera's largest shareholder with a 37.3% stake in the company, and holds 19.9% of Nordea. The other asset left to sell, SBAB, isn't nearly as big.

France Télécom's bid for TeliaSonera fell through Monday after the Nordic company said the offer, valuing it at $42 billion, was too low.

Mr. Odell said he agreed and reiterated he is looking to sell the stake.

Write to Gustav Sandstrom at gustav.sandstrom@dowjones.com

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